INVESTIGATION OF THE CRUISE LINER INDUSTRY

SUMMARY of STUDY RESULTS | 7.16.08

MITCHELL DUPLESSIS PROJECTS (PTY) LTD | LANDDESIGN

CRITICAL TOPICS COVERED

The modern cruise industry and the overall prospects for continued growth at a global and regional level

Infrastructure and services required by homeports and ports-of-call

Insights on other cruise regions business success—notably, Australia / New Zealand and South America

Recommendations as to how Cape Town should consider moving forward and to become a greater participant within the industry

SEC1 GLOBAL CRUISE

CHARTERISTICS

CRUISE INDUSTRY: GROWTH IN PASSENGERS

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

1980 1990 2000 2008

Pass

enge

rs ('0

00)

North America Europe Australasia

GLOBAL PASSENGER LEVELS HAVE DOUBLED EVERY DECADE

SOURCES: CLIA, 2006 AND CIN, 2008

LEADING CRUISE CONGLOMERATES

CARNIVAL CORPORATION11 brands, 89 Vessels, 169,584 total berths

Carnival Cruise Lines IberocrucerosPrincess Cruises AIDACunard P&O Cruises - UKSeabourn Cruise Lines P&O Cruises - AustraliaHolland America Ocean VillageCosta Cruise

ROYAL CARIBBEAN5 brands, 38 Vessels, 79,446 total berths

CelebrityRoyal Caribbean InternationalPullmanturCDFAzamara

NCL / STAR CRUISES3 brands, 16 Vessels, 36,484 total berths

NCLNCL AmericaStar Cruises

MSC Cruises1 brand, 10 Vessels, 19,530 total berths

MSC

46%

21%6%

5%

22%

SOURCE: CIN, 2008

GROWTH OF INDUSTRY SUPPLY, 2000-2012

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Bert

hs

Berths New Berth Capacity

38 VESSELS ON ORDER; $22.3 BILLION IN NEW INVESTMENT

SOURCES: CIN, 2008 AND WWW.CRUISECOMMUNITY.COM, JULY 2008

FORECAST GROWTH OF INDUSTRY SUPPLY

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

2008 2010 2015 2020 2025

Bert

hs

Low Medium High

372,100

798,700

612,700

FORECAST GROWTH OF INDUSTRY PASSENGERS

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

2008 2010 2015 2020 2025

Pass

enge

rs

Low Medium High

15.2 MIL

31.2 MIL

24.0 MIL

SEC2 SOUTHERN AFRICA

CRUISE CHARTERISTICS

SOUTHERN AFRICA CRUSING REGION

SOUTHERN AFRICA CRUSING REGION

Southern Africa, which includes pan-Southern Africa offerings and often island destinations

Seychelles and related cruises to the islands of Reunion, Mauritius and others

Specialty cruises to St. Helena

Repositioning cruises

World cruises

VESSELS OPERATING IN THE REGION, 2008/09 An estimated 83 cruises are planned for the 2008/09

season; market capacity of 31,657 passengers An estimated 16 different vessels in the region Vessels in the market on a variety of different

segments and predominately directed toward a European cruise audience

Average cruise duration is a lengthy 18 days The cruise season is generally from October to April;

most cruises offered December and January

SOURCES: INDUSTRY WEBSITES, 2008, WWW.CRUISECOMMUNITY.COM, 2008, MDA / LDI 2008

VESSELS OPERATING IN THE REGION, 2008/09 Itineraries contribute 102 vessels calls to South

African ports, with an estimated 45 of these arriving to Cape Town (44%)

Of the leading four cruise industry conglomerates, Royal Caribbean is absent from the list of lines offering cruises in the region

Primary regional homeports identified include Cape Town, Durban, Mombasa, and Mahe

SOURCES: INDUSTRY WEBSITES, 2008, WWW.CRUISECOMMUNITY.COM, 2008, MDA / LDI 2008

CURRENT REGIONAL CHALLENGES

Region is one of the smallest amongst other global deployment areas

Generally not on the radar of primary cruise operators other than an occasional call / operation as part of a repositioning or world cruise

Flight and vessel repositioning costs also limit some lines in their thinking about deployment to the region

Concerns on regional safety and stability Uncertain size of regional consumer base

CURRENT REGIONAL OPPORTUNITIES

Key industry growth fundamentals Diverse region with similar characteristics and

itinerary diversity as other successful areas Marquee ports-of-call and homeports The region has shown consistency in preserving its

share of the growing global industry 2010 FIFA World Cup event

– Successfully delivered by South Africa, this event could serve as an important catalyst—much like Olympics in Barcelona and Australia—to move the regional cruise market forward

CLIA 2008 MARKET PROFILE

REGIONAL FORECAST GROWTH IMPLICATIONS Business as usual will likely yield limited results; low

to medium trend line Activity in marketing and organizational components

key to regional viability Assuming Cape Town continues to see 44% of

capacity, passenger throughput could be 126,000 by 2020 under the high scenario– With cruise homeporting primary element of Cape

Town’s business, revenue passengers could approach 250,000

SEC3 CRUISE INDUSTRY

NEEDS FOR OPERATIONS

CRUISE LINE DESTINATION SELECTION CRITERIA Appeal as a travel and leisure

destination Type and quality of cruise tourism

infrastructure needed to support vessel operations and movement of passengers

A market basis and strategic fit within a greater cruise ship deployment scheme

SEC6 RECOMMENDATIONS

MOVING FORWARD

RECOMMENDATIONS MOVING FORWARD

Software. Programs and marketing efforts developed to ensure product quality, brand recognition, communication efforts and others.

Operations. Functional enhancements that allow for improved cruise operations.

Hardware. Strategies and action items to ensure that appropriate capital improvements are planned and developed to meet anticipated cruise industry throughput and facilities needs.

SOFTWARE: OVERARCHING OBJECTIVES

A large portion of the ultimate success to be achieved by Cape Town and South Africa is reliant on moving forward with marketing efforts– Establish a strong case for Southern Africa cruising

with cruise lines – Work to build a foundation of seasonal business

with international consumers; and,– Foster a local consumer base for cruise products.

Emphasis should be placed on organizing the messages and messengers first

Resources beyond those presently committed by Cape Town and elsewhere are going to be required

SOFTWARE: RECOMMENDATIONS

Cruise marketing plan – It is critical that Cape Town refine and implement a

specific cruise marketing plan for the City and region.

– Hold a marketing goals workshop – Identify the marketing audience– Message development and refinement – Messenger identification

Formulation of a Cruise Cape Town Committee (CCTC) In-house education program Incentives packaging for cruise lines

SOFTWARE: RECOMMENDATIONS

Market to the Cape Town community Development a cruise passenger visitor's kit Lead in development of Southern Africa Cruise

Association Establish a methodology for port costs benchmarking Hold cruise tourism provider education sessions Establish strategic relationships with key ports in the

region

SOFTWARE: RECOMMENDATIONS

Conduction travel agent education sessions International Cruise Trade Show Participation Hold North American and European cruise operator

visits Hold North American and European cruise operator

familiarization trips– Possibly linked with FIFA 2010

Work with tour providers to design new offerings suitable for cruise passengers

Establish targeted provider program offerings – Luxury, adventure, destination

OPERATIONS: OVERARCHING OBJECTIVES

The smoothness of operations is as important as the quality of the facilities; think destination delivery– Operational planning and coordination– Benchmarking– Guest security and safety assessments and

programs– Organization and communication

OPERATIONS: RECOMMENDATIONS

Become deeply involved with the FIFA 2010 floating hotel destination delivery– Sportscom (communication and sports marketing)

Meet with Port / V&A regularly on threat assessment and security issues– Conduct assessments for cruise passengers and

generate a specific plan to share with the lines– Hold public safety education sessions

Become involved in homeport and port-of-call operations planning, especially for peak days

OPERATIONS: RECOMMENDATIONS

Develop and implement a cruise benchmarking strategy

Develop a scheduling plan for the committee Establish an operations audit and enhancements

program based on benchmarking feedback Establish Cape Town primary and secondary venues

and tour provider assessments Establish a smart-pass program

HARDWARE: OVERARCHING OBJECTIVES

Additional cruise berthing and related terminal spaces are needed over the medium- to long-term

Options need to be explored associated with the future role of V&A Waterfront, the Port of Cape Town (NPA) and City to create a win-win-win scenario that will be conducive to meeting future cruise industry opportunities

To reduce risk as well as meet other needs observed in the maritime and commercial environment, multi- and mixed-use cruise development approaches should be pursued.

HARDWARE: RECOMMENDATIONS

Establish a cruise facilities improvement plan– Engage the cruise lines for assistance– Financial component

Prepare a MOU between V&A Waterfront, the Port and City on plan implementation

Ensure a working, interim capital improvements plan for delivery of homeport and port-of-call needs

Prepare a detailed plan, with emphasis on development of a mixed-use facility with supporting revenue inputs

Implement the detailed plan timed to market conductions (cruise or mixed-use components)

Location C: Duncan Dock Version 1 (Variants)

+ Multi-Use Ocean Terminal – 9,290 m2

INVESTIGATION OF THE CRUISE LINER INDUSTRY

DRAFT STUDY RESULTS | 7.16.08MITCHELL DUPLESSIS PROJECTS (PTY) LTD |

LANDDESIGN